Prediction: Costco Has What it Takes to Surge and Split in 2026

"Now down just shy of 20%, the bulk-buy warehouse retailer is in a rather difficult spot, as investors punish the higher-multiple growth names, including the ones that are doing well. While sales growth and renewals are still in a decent spot (though both have experienced a slower pace of growth), it seems like the lofty valuation is mostly to blame for what many would consider to be a lost year for the industry juggernaut."

"They're arguably still expensive, and the membership might offer just a bit less bang for the buck, especially as outperforming rivals, most notably Walmart ( NASDAQ:WMT), begin to flex their muscles on the quality front, while other consumers perhaps shift gears to more upscale retailers that they may have switched from when inflation was through the roof. With shares of Walmart gaining more than 25% on the year, I think there is a bit of reason for concern on the part of Costco holders."

"With shares of Walmart gaining more than 25% on the year, I think there is a bit of reason for concern on the part of Costco holders. For the most part, I think there's really nothing fundamentally wrong with the Costco story. It remains an incredibly well-run company and one that could enjoy significant growth over the years as it expands its footprint at home and abroad. The winning formula will continue to work, even as consumer sentiment makes shifts (either upward or downward) from here."

Costco shares fell nearly 20% this year as investors penalized higher-multiple growth names despite continued sales growth and membership renewals that have slowed. The company's valuation appears high relative to performance, leaving shares without a clear near-term catalyst. Competitors such as Walmart have outperformed, gaining over 25% year-to-date, and pressure from quality-focused rivals and shifts to upscale retailers may weigh on Costco's appeal. Costco remains well-run with potential for long-term expansion domestically and internationally. A key investor question centers on an appropriate valuation multiple and whether a share split in 2026 could improve accessibility for smaller investors.

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